(Bloomberg) — China’s multi-year real estate crisis is expected to extend into 2025 as prices and sales remain weak despite government stimulus measures to boost demand, according to Fitch Ratings.

New home prices in China will fall another 5% next year, according to measurements by China’s official statistics bureau, or about the same pace this year, said Wang Ying, managing director at Fitch in Shanghai. Wang expects new home sales to decline another 10% by area.

“The turning point of the real estate sector has not yet arrived,” Wang said. “Whether the recent warming can continue faces enormous uncertainty.”

Over the past two months, China has launched its strongest set of policies to boost the property market, including reducing borrowing costs on existing mortgages, easing purchasing restrictions in major cities and reducing taxes on home purchases.

The commercial hub of Guangzhou has become the first Tier 1 city to remove all restrictions on the purchase of residential properties. Beijing, Shanghai and Shenzhen have allowed more people to buy residences in suburban areas, while allowing others to buy more homes.

These measures helped to mitigate the decline in property prices in China for the second month of October. But the sales recovery has mainly been limited to first-tier cities and has not spread to smaller cities, Wang said. Worse, prices in existing markets continued to fall and listings continued to pile up, suggesting that the closely watched megacity segment has not bottomed out, Wang added.

That will put further pressure on Chinese banks, which are grappling with record margins, falling profits and rising bad loans from corporate borrowers. Chinese banks’ net interest margins fell to 1.5% in the third quarter, the lowest in the Asia-Pacific region, and could decline further next year, said Vivian Xue, director of financial institutions at Fitch. .

Bad debt ratios from residential mortgages have increased slightly by 10 to 20 basis points in recent quarters, as expectations of low income and slow deliveries of finished homes dampen buyers’ willingness to repay their mortgages, Xue said.

China also faces economic difficulties as Donald Trump takes office next year. Investors expect Beijing to roll out more stimulus policies to offset the damage caused by possible additional tariffs. The country’s growth could fall by as much as two percentage points if Trump follows through on his plan to raise import taxes to 60% on Chinese goods, economists at Standard Chartered Plc and Macquarie Group Ltd said.

In November, China unveiled a 10 trillion yuan ($1.38 trillion) package to help resolve the local government debt crisis. But Davis Sun, senior director at Fitch, takes a “cautious view” on the plan’s effectiveness, adding that some LGFVs could label themselves differently to get around restrictions preventing them from taking on more hidden debt.

(Updates with comments in last two paragraphs.)

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